An individual auditor who has completed his one term of five consecutive years shall not be eligible for reappointment as auditor in the same company for five years from the completion of his term".
If one individual continued as auditor for 4 years and resigned .. after 1 year break shall he get one more 5 years term?? ..
According to Sub-Section 2 of Section 139 of Act:
No listed company or a company belonging to such class or classes of companies as may be prescribed, shall appoint or re-appoint—
(a) an individual as auditor for more than one term of five consecutive years;
and
(b) an audit firm* as auditor for more than two terms of five consecutive years
* the firm shall include the Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008 (Explanation to Section 139 of the Act).
So, if an individual as proprietor is appointed as auditor, its appointment period will be 5 consecutive years, while if audit firm (eg. partnership firm or LLP) is appointed, its appointment period will be 10 consecutive years (2 terms of five consecutive years).
The word ‘year’ has not been defined in Companies Act, 2013 nor the Rules provide any clarification of term ’year’. The general interpretation suggests a time period of 12 months from the date of original appointment.
Classes of companies covered in Rotation Scheme
According to Rule 5 of The Companies (Audit and Auditors) Rules, 2014, for the purposes of sub-section (2) of section 139, the class of companies shall mean the following classes of companies excluding one person companies and small companies:-
(a) all unlisted public companies having paid up share capital of rupees 10 crore or more;
(b) all private limited companies having paid up share capital of rupees 20 crore or more;
(c) all companies having paid up share capital of below threshold limit mentioned in (a) and (b) above, but having public borrowings from financial institutions, banks or public deposits of rupees 50 crores or more.
An individual as auditor for more than one term of 5 consecutive Years; and an audit firm as auditor for more than two terms of 5 consecutive years
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